He came close on Wednesday to precipitating a damaging defeat for the Prime Minister in Parliament that, if successful, would have eclipsed her Government's bid to sell its Budget to an already-sceptical public.

Now allegations of breaching parliamentary rules by failing to declare money provided by the New South Wales Labor Party to help with legal expenses have again pulled attention away from Gillard's agenda.

They could have an even more serious implication: the two independents whose votes Gillard needs to survive have been clearly angered by the continuing scandal and are considering options that could include voting against the Government on the issue.

Gillard will struggle to reach the high ground, with the renewed Thomson scandal giving Opposition leader Tony Abbott more traction as he ploughs into Treasurer Wayne Swan's economic management.

While the Coalition kept up its attack on the Government's probity, Abbott was last night delivering his Budget reply speech, in which he intended to attack Swan's projected A$1.5 billion surplus as a chimera and to outline his alternative policies.

His targets include the carbon tax due to start on July 1, and key welfare measures and spending cuts announced by Swan on Tuesday night.

The Opposition on Wednesday tried to defeat Swan's planned bonuses for parents with children at school, but was defeated by the combined votes of the Government, Green MP Adam Bandt, Thomson - now sitting on the crossbenches since his suspension from the Labor Party - and independents Rob Oakeshott and Tony Windsor.

The vote showed Gillard's parlous position. With Speaker Peter Slipper unable to vote since stepping aside while criminal and civil allegations of fraud and sexual harassment are resolved, and Labor Deputy Speaker Anna Burke restricted to a casting vote, any defections would defeat the Government on the floor of the House.

Oakeshott and Windsor have indicated they might vote with the Coalition on the Thomson allegations, hammering Gillard and ensuring failure for her strategy of using the Budget to recover support.

The Thomson scandal has been a bomb waiting to detonate for years.

Thomson faces allegations that during his time as national secretary of the Health Services Union - now being forced into administration - he improperly used his official credit card to hire prostitutes, took more than A$100,000 ($128,000) in unauthorised cash withdrawals, spent A$73,000 on food and entertainment, and used more than A$250,000 of union money to fund his campaign for the NSW central coast seat of Dobell.

The allegations, which Thomson "strenuously" denies, were detailed in an 1100-page report by industrial watchdog Fair Work Australia, now pursuing civil action against the MP in the Federal Court.

On Tuesday the Opposition unsuccessfully tried to suspend Thomson from the House. On Wednesday it intended to move that Thomson be forced to explain himself to Parliament, a vote that almost certainly would have succeeded with the likely support of Oakeshott and Windsor.

Instead, Thomson, after speaking with the pair and senior Labor ministers, agreed to a 15-minute explanation during the next parliamentary session beginning on May 21, letting Gillard off the hook.

But yesterday Thomson was facing new claims that he had not included payments from the NSW party in the pecuniary interest register, a serious offence. The payments, to help with legal bills, were made over months and stopped only with his suspension from the party.

Thomson claims he had updated his entries in the register within the required time, but the Opposition gleefully used the allegations as another cudgel.

Describing Thomson's explanations as "preposterous", Senate Opposition leader Eric Abetz attacked Gillard and demanded she reveal all she knew about the affair.

"This tawdry episode reflects squarely on the Prime Minister herself and the low standards set by her Government," he said.

"If she had any shred of credibility left, she would disown Craig Thomson's vote in the House of Representatives."

Gillard told Sky News the payments were a matter for Thomson and NSW Labor, and accused the Opposition of hypocrisy for demanding she disown the MP's vote when it had accepted the votes of Coalition MPs facing - and in some cases convicted of - criminal allegations.

"It doesn't work, it's not right, it can't possibly happen like that ," she said. "Mr Abbott should knock off the hypocrisy."

But Oakeshott told ABC radio that even after Thomson had made his explanation, Parliament needed to reflect on how it would respond to the "damning findings" of the Fair Work Australia report.

He later told Fairfax's National Times he was angered by the burden placed on Parliament by the report, and said he would not baulk at action against Thomson even if it costs the Government a crucial vote.